FRANKFURT (Reuters) - The European Central Bank sharply raised its private sector bond purchases last week, indicating it may skew the remaining months of its 2.55 trillion euro (2.25 trillion pounds) quantitative easing scheme towards corporate and covered bonds.
Half of the ECB’s 7.65 billion euros of worth of net bond purchases came from the private sector last week, three times the long run average, Reuters calculations show.
Such a number offers a clue to what the ECB means by keeping these buys “sizeable” this year.
The ECB halved monthly bond purchases from the start of the year but some policymakers argued that corporate buys should be kept steady, increasing their proportion in the overall scheme, because government debt is increasingly difficult to find and cash to companies may stimulate growth more effectively.
While the ECB has hinted at such a shift when it said that private sector buys would remain sizeable, the January numbers were the best hard evidence yet of its intent.
For January so far, private sector buys account for 35 percent of purchases, twice their rate since the programme started nearly three years ago, ECB data showed. In December, purchases of corporate bonds, asset backed securities and covered bonds totalled just 8 percent of all debt buys.
The ECB plans to buy 30 billion euros worth of bonds per month until the end of September as it aims to keep borrowing costs low to stimulate borrowing and spending all in the hope of generating inflation.
But the scheme is expected to end this year as growth continues to pick up and unemployment falls, putting the euro zone economy on its best run in a decade.
For more detail on the ECB's asset purchases, please click: here
Reporting by Balazs Koranyi Editing by Jeremy Gaunt